PETITIONER APPEARING PRO SE: ATTORNEYS FOR RESPONDENT:
ANTHONY WAYNE RUSSELL STEVE CARTER
Columbus, IN ATTORNEY GENERAL OF INDIANA
LINDA I. VILLEGAS
DEPUTY ATTORNEY GENERAL
IN THE INDIANA TAX COURT _____________________________________________________________________
ANTHONY WAYNE RUSSELL, ) ) Petitioner, ) ) v. ) Cause No. 49T10-0103-SC-31 ) INDIANA DEPARTMENT OF ) STATE REVENUE, ) ) Respondent. ) ______________________________________________________________________
shall be liable to the state of Indiana for the payment of the
required to be deducted and withheld under this section . . . .
Ind. Code § 6-3-4-8(a). Any money that an employer deducts and withholds shall immediately upon such deduction be the money of the state and shall [be held] . . . in trust for the state of Indiana[.] Ind. Code § 6-3-4-8(f). Moreover, the law provides that in a corporation, every officer, employee, or member of such employer, who, as such officer, employee, or member is under a duty to deduct and remit such taxes shall be personally liable for such taxes, penalties, and interest. I.C. § 6-3-4-8(g).
During the tax years at issue, Carrollton had one to fifteen employees. (Trial Tr. at 34.) Thus, Carrollton was required to withhold taxes on wages paid to its employees and hold those taxes in trust for the State. See I.C. §§ 6-3-4-8(a), (f). Furthermore, Indiana Code § 6-3-4-8 holds Carrollton liable to the State for the payment of these taxes withheld. See I.C. § 6-3-4-8(a)(1). Russell admitted that, as president of Carrollton, he was responsible for filing the withholding forms and taxes. (Trial Tr. at 23.) Because Russell was president and owner of Carrollton and had a duty to remit the withholding taxes, he is liable for Carrolltons unpaid withholding taxes, interest, and penalties for the years at issue. See I.C. § 6-3-4-8(g).
Russell does not dispute the fact that he is personally liable for the unpaid withholding taxes. Instead, Russell argues that he should not be required to pay the withholding taxes because he did not receive proper personal notice of the assessment and because the assessment of the withholding taxes is barred by the statute of limitations. Russell also argues that the interest and penalties should be waived. The Court disagrees with Russell.
First, Russell received sufficient notice of the proposed assessment. Where the Department provides notice of a proposed assessment to the corporation, it is not required to provide personal notice to the responsible officer. Ball v. Indiana Dept of Revenue, 563 N.E.2d 522, 524 (Ind. 1990). During the tax years at issue, the Department sent proposed assessments to Carrollton for the unpaid withholding taxes. (Respt Ex. 2.) Thus, the Departments notices to Carrollton provided sufficient notice to Russell. See Id. at 525.
Second, the assessment of Carrolltons unpaid withholding taxes is not barred by the statute of limitations. If the Department determines that a taxpayer has failed to pay a tax, it may issue a proposed assessment only if it is not more than three years after the latest of the date the return was filed or the due date of the return. Ind. Code § 6-8.1-5-2. The Department sent Carrollton notice of proposed assessments of its unpaid withholding taxes within the same year that Carrollton was liable for those taxes. (Respt Ex. 2.) Thus, notice to Carrollton was timely, and that notice constituted notice to Russell. See Ball, 563 N.E.2d at 525.
Because the withholding taxes remained unpaid, the Department sent notice of the proposed assessment to Russell, as a responsible officer of Carrollton, in 1995. Russells claim that the 1995 notices were past the three year statute of limitations is without merit. The fact that the Department did not send Russell personal notice of assessment until 1995 is of no moment because the timely notice to Carrollton tolled the statute of limitations for Russell. See Ball, 563 N.E.2d at 525. Thus, the Departments assessment of unpaid withholding tax is not barred by the statute of limitations. See Id.
Moreover, Russells argument that the interest and penalties should be waived is also without merit. Russell argues that the Department should waive the interest and penalties assessed to him because of the delay between his liability for the withholding taxes and his personal notice of the assessment (1987 to 1995) and because of the delay between his notice of assessment and his hearing before the Department (1995 to 2000). See footnote Russell bases his argument on Indiana Code § 6-8.1-10-2.1, which states:
A person who wishes to avoid the penalty imposed under this section must make an affirmative showing of all facts alleged as a reasonable cause for the persons failure to . . . timely remit [withholding] tax held in trust, in a written statement containing a declaration that the statement is made under penalty of perjury. The statement must be filed with the return or payment within the time prescribed for protesting departmental assessments.
Ind. Code § 6-8.1-10-2.1(e) (emphasis supplied).
Russells reliance on this statute does not support a waiver of interest. Indiana Code § 6-8.1-10-2.1 only applies to penalties. I.C. § 6-8.1-10-2.1(e). Furthermore, the statute dealing with liability for interest does not allow the Department to waive interest imposed. See Video Tape Exchange Co-op. of America, Inc. v. Indiana Dept of State Revenue, 533 N.E.2d 1302, 1306 (Ind. Tax Ct. 1989) (citing Ind. Code § 6-8.1-10-1(e)). Therefore, the Department correctly denied Russells request to waive the interest.
Finally, Russell has not made a showing that entitles him to a waiver of penalties. To waive a penalty, the statute requires that the taxpayer show reasonable cause why he failed to timely pay the withholding tax. I.C. § 6-8.1-10-2.1(e). To establish reasonable cause, a taxpayer must demonstrate that [he] exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed[.] Video Tape Exchange, 533 N.E.2d at 1305 (quoting Ind. Admin. Code 45, r. 15-11-2(c)). Russell has failed to make such a showing.
At trial, Russell admitted receiving some of the withholding assessments when the Department sent them to Carrollton. (Trial Tr. at 29.) He stated that he paid some and did not pay others. (Trial Tr. at 23.) Russell has offered no reasonable cause showing why the taxes were not paid. Instead, he merely points the finger of blame at the Department for a delay in holding a hearing. See footnote Because Russell has failed to show reasonable cause for his failure to pay the withholding taxes, he is not entitled to a waiver of any penalties associated with those unpaid taxes.